Breaking with the state's history of racial tension, South Carolina Republicans have overwhelmingly chosen an Indian-American woman to run for governor and nominated a state lawmaker who is in line to become the first black Republican US congressman in more than a century.

Nikki Haley, a Christian convert, overcame allegations of infidelity and a slur against her Sikh heritage to win the Republican primary runoff and could become South Carolina's first woman governor.

She immediately became the frontrunner in the race against the Democratic gubernatorial candidate, state senator Vincent Sheheen, in conservative state. The Republican governor Mark Sanford, whose extra-marital affair caused a scandal, is leaving the post because of term limits.

Haley wasn't the only candidate aiming to upend tradition in South Carolina. State Republican Tim Scott defeated Paul Thurmond, an attorney who is the son of the one-time segregationist US senator Strom Thurmond. Scott is now poised to become the nation's first black Republican congressman since Oklahoma's JC Watts retired in 2003.

The victories by Haley and Scott – both favourites for the general election in November – offered clear signs of racial progress in the South.

"South Carolina just showed the rest of the country what we're made of," Haley said. "It's a new day in our state, and I am very blessed to be a part of it."

With her victory, she has secured her place as a rising female star in the Republican Party, if not a potential 2012 vice-presidential candidate. She would be the second Indian-American governor of a US state after the Louisiana Republican governor, Bobby Jindahl.

Haley, 38, came within a percentage point of winning the gubernatorial nod outright on 8 June. A backer of one opponent referred to her as a "raghead" – a derogatory term for people of Middle Eastern or Indian descent.

Haley had 65% of the vote to 35% for Republican Gresham Barrett. In a fitting twist, Haley gave her victory speech at the entrance to the South Carolina Confederate Relic Room and Military Museum.

Scott, 44, secured the backing of Palin, the anti-tax Club for Growth and several Republican leaders in Washington. He had 68% of the vote compared with 32% for Thurmond. Scott is thought to be strongly favoured over the Democrat Ben Frasier, who is also black, in November.